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How "natural" are natural monopolies in the water supply and sewerage sector ? Case studies from developing and transition economies
 
Author:Nauges, Celine; van den Berg, Caroline; Collection Title:Policy, Research working paper ; no. WPS 4137
Country:Brazil; Moldova; Colombia; Vietnam; Date Stored:2007/02/09
Document Date:2007/02/01Document Type:Policy Research Working Paper
SubTopics:Urban Water Supply and Sanitation; Town Water Supply and Sanitation; Economic Theory & Research; Water and Industry; Water Supply and Sanitation Governance and InstitutionsLanguage:English
Region:Europe and Central Asia; East Asia and Pacific; Latin America & CaribbeanReport Number:WPS4137
Volume No:1 of 1  

Summary: Using data from the International Benchmarking NETwork database, the authors estimate measures of density and scale economies in the water industry in four countries (Brazil, Colombia, Moldova, and Vietnam) that differ substantially in economic development, piped water and sewerage coverage, and characteristics of the utilities operating in the different countries. They find evidence of economies of scale in Colombia, Moldova, and Vietnam, implying the existence of a natural monopoly. In Brazil the authors cannot reject the null hypothesis of constant returns to scale. They also find evidence of economies of customer density in Moldova and Vietnam. The results of this study show that the cost structure of the water and wastewater sector varies significantly between countries and within countries, and over time, which has implications for how to regulate the sector.

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